26 and 27 Feb 2016

Food Security :-

Background:-The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance emphasizes that the main aim of food management policy is to provide food security to the population. Providing food security entails making food available at affordable prices at all times, without interruptions. In order to provide food security, in the current agriculture scenario, India has to focus on supplies which are timely and uninterrupted and affordable for the poor. Though India’s GDP growth has been impressive and the agricultural production has also increased over the past few decades, hunger and starvation still persist among the poorer section of the population. There has been moderation of inflation including food inflation during the last two years, but more needs to be achieved by freeing up markets, augmenting supply of food and leveraging the use of IT.

India Has the Second Highest Number of Undernourished Peoplewhich Warrants Immediate Attention

Economic Survey 2015-16 states that India has the second highest number of undernourished people at 194.6 million person (FAO, State of Food Insecurity in the World, 2015) which warrants immediate attention. Moreover, with 27 per cent of the population below the poverty line, the rise in prices of food impacts the poor adversely, with a greater proportion of their household incomes being spent on food. Therefore, along with provision of food subsidy, stability in agricultural commodity prices is essential for making poorer sections food secure.

There is a strong correlation between stability in agricultural production and food security. Volatility in agricultural production impacts food supplies and can result in spikes in food prices, which adversely affect the lowest income of the population.

With a large number of people who remain undernourished and the issues of volatility in agricultural prices, Economic Survey 2015-16 states that India has one of the largest scheme of food schemes in the World to ensure food security. There is entitlement feeding programs like the Integrated Child Development Scheme (ICDS) (All Children under six, pregnant and lactating mothers) and MDMS (Mid Day Meal Schemes), food subsidy programmes like the Targeted Public Distribution System, Annapurna ( 10 Kgs of free food grain for destitute poor) and the Employment Programmes like Mahatama Gandhi National Rural Employment Guarantee Scheme (100 days of employment at minimum wages) to ensure food security.

Few Data of Importance:-

India Ranks First in Milk Production, Accounting for 18.5 Per Cent of World Production

India Recording A Growth of 6.26 % whereas World Milk Production Increases by 3.1 %

Per Capita Availability of Milk in India has Increased from 176 grams per day in 1990-91 to 322 grams per day by 2014-15

Egg and Fish Production has also Registered an Increasing trend over the Years

Production of Horticulture Crops have Outpaced the Production of Food Grain Since 2012-13.Percentage Share of Horticulture Output in Agriculture is more than 33 Per Cent

Labour Force participation Rate higher in Rural Areas than Urban Areas, significantly lower for females than males. Women account for 57% of employment given under MGNREGA in the Current Financial Year

Indian Economy Outlook

Indian economy stands out as a haven of macroeconomic stability, resilience and optimism and can be expected to register GDP growth that could be in the range of 7.0 per cent to 7.75 per cent in the coming year.

Despite the global meltdown, Indian economy will continue to grow more than 7 percent for the third year in succession in 2016-17 helped by a normal monsoon,. The Economic Survey (2015-16) presented in Parliament today by the Finance Minister states that due to Government’s commitment to carry the reform process forward, conditions do exist for raising the economy’s growth momentum to 8 percent or more in the next couple of years. The survey underlines that despite global headwinds and a truant monsoon, India registered 7.2 per cent growth in 2014-15 and 7.6 per cent in 2015-16, thus becoming the fastest growing major economy in the world.

The survey points-out that the growth in agriculture sector in 2015-16 has continued to be lower than the average of last decade, mainly on account of it being the second successive year of lower-than-normal monsoon rains. As per the information of the Department of Agriculture and Cooperation and Farmers Welfare for 2015-16, the production of foodgrains and oil-seeds is estimated to decline by 0.5 per cent and 4.1 per cent respectively, while the production of fruits and vegetables is likely to increase marginally. A brighter picture is expected to emerge from the allied sectors consisting of livestock products, forestry and fisheries with a growth exceeding 5 per cent in 2015-16, which will provide some impetus to rural incomes.

Growth in industry is estimated to have accelerated during the current year on the strength of improving manufacturing activity. The private corporate sector, with an around 69 per cent share of the manufacturing sector, is estimated to grow by 9.9 per cent at current prices in April-December 2015-16. The Index of Industrial Production (IIP) showed that manufacturing production grew by 3.1 per cent during April-December 2015-16, vis-à-vis a growth of 1.8 per cent in the corresponding period of the previous year. The ongoing manufacturing recovery is aided by robust growth in petroleum refining, automobiles, wearing apparels, chemicals, electrical machinery and wood products including furniture. Apart from manufacturing, the other three segments of the industry sector- electricity, gas, water supply and related utilities, mining and quarrying and construction activities are witnessing a deceleration in growth.

The survey underlines that the growth in the services sector moderated slightly, but still remains robust. Being the main driver of the economy, the sector contributed about 69 per cent of the total growth during 2011-12 to 2015-16 and in the process expanding its share in the economy by 4 percentage points from 49 to 53 per cent.

The services sector in India has remained the most vibrant sector in terms of contribution to national and state incomes, trade flows, FDI inflows, and employment. According to the Economic Survey 2015-16 tabled in Parliament today, the services sector contributed almost 66.1% of its gross value added growth in 2015-16 becoming the important net foreign exchange earner and the most attractive sector for FDI (Foreign Direct Investment) inflows. Despite the slow down in the post crisis period (2010-14) India showed the fastest service sector growth with a CAGR (Compound Annual Growth Rate) of 8.6% followed by China at 8.4%. In 2014 India’s services sector growth at 10.3% was noticeably higher than China at 8.0%. As per the ILO (International Labour Organisation) report on “Global Employment and Social Outlook : Trends 2015” job creation in the coming years will be mainly in the service sector.

The survey in its outlook clearly points out though the emerging market economies have clearly slowed down, the Indian economy stands out as a haven of macroeconomic stability, resilience and optimism and can be expected to register GDP growth that could be in the range of 7.0 per cent to 7.75 per cent in the coming year.

Spreading JAM across India’s Economy:-

The Economic Survey 2015-16 presented here today in the Parliament by the Union Finance emphasizes that JAM Trinity –Jan dhan, Aadhaar, Mobile- can help government to implement large-scale, technology-enabled and real-time Direct Benefit Transfers (DBTs) to improve economic lives of India’s poor. First variety of JAM- PAHAL scheme of transferring LPG subsidies via DBT -has reduced leakages by 24 per cent. Economic Survey suggests that while deciding where next to spread JAM, policymakers should consider the challenges of beneficiary identification, distributor opposition and beneficiary financial inclusion. Spreading JAM to other areas will reduce leakages and provide more fiscal space to the Government.

JAM Components:

Economic Survey divides JAM into three components-

Identification or First-Mile: Identification of beneficiaries by government

Transfer or Middle-Mile: Transfer of fund to beneficiaries by government

Access or Last-Mile: Access of fund by beneficiaries

Identification:

First-mile deals with identification of beneficiary. This layer has issues of ghost and duplicate names due to administrative and political discretion and use of pre-Aadhaar database. It is easier to implement the JAM for universal scheme than targeted one as identification will be easier. Identification of household-individual connection is important to note here as some schemes target at household level like JDY and some at individual level like Aadhaar. Aadhaar can help in better identification of the beneficiaries.

Transfer:

Middle-mile deals with the challenges of payment where government transfer benefits to the banks. But lack of bank accounts and its information with government put hindrances in the middle-layer connectivity. Main issue in this layer is of within-government coordination and dealing with supply chain interest groups. Jan Dhan can help beneficiaries to have bank accounts.

Access:

Last-mile layer faces issues of lesser Bank penetration, mostly in rural areas. It deals with actual transfer of money from Bank to Beneficiary accounts. It also deals with issues of exclusion of genuine beneficiaries. Mobile can inform about benefits and also allow easier fund transfer.

Where next to spread JAM?

Economic Survey argues that policymakers should decide where to apply JAM based on two considerations of-

Amount of leakages and,

Control of the central government.

If amount of the leakages in a given scheme/area is huge then it can be next target for introduction of JAM as subsidies with higher leakages will have larger returns from introducing JAM. Similarly control of central government will reduce administrative challenges of co-ordination and political challenges of opposition by interest groups.

Based on these two criteria- leakages and central government control-Survey suggests fertilizer subsidies and within-government transfers as two most promising areas for introduction of the JAM.

JAM Preparedness Index:

Further economic survey has formulated JAM-Preparedness Indices for Urban and Rural areas in each state. It uses Aadhaar penetration, basic bank account penetration and Banking Correspondents (BC) density as indicators for the indices. It has also prepared Biometrically Authenticated Physical Update or BAPU-Preparedness Index, using Aadhaar penetration and Point of Sale machines as indicators, for each state and has compared Rural-JAM Preparedness Index with BAPU-Preparedness Index. It has found that many states are having higher scores in BAPU-Preparedness Index as compared to Rural JAM-Preparedness Index. Thus it suggests use of BAPU as short-term solution to reduce the leakages in these states, till states are well prepared for introduction of the JAM.

Conclusion:

Introduction of DBT in LPG and MGNREGS have proved that use of JAM can considerably reduce leakages, reduce idle funds, lower corruption and improve ease of doing business with the government. Despite huge improvements in financial inclusion due to Jan Dhan, JAM Preparedness indicators suggest that there is still long way to go. Center can invest in last-mile financial inclusion via further improving BC networks and promoting the spread of the mobile money. In the meantime models like BAPU can be used as an alternative to reduce the leakages.

NRHM -National Rural Health Mission

The National Rural Health Mission (NRHM) was launched in 2005 to improve the healthcare services, particularly in rural areas. NRHM has been subsumed as a Sub Mission of the overarching National Health Mission (NHM) with the National Urban Health Mission as the other Sub Mission. Under NHM, support to States/UTs is provided for five key components:-

(v) Infrastructure Maintenance- to support salary of ANMs and LHVs etc.

Steps to boost Make in India:-

A slew of steps, such as eliminating exemptions on countervailing duties on imports, monetisation of land owned by public sector companies and allowing industries to buy electricity directly from the markets, are needed to enable Make in India Initiative a success, according to the Economic Survey released on Friday.

The duty exemptions are favouring foreign producers over domestically made goods thus defeating the initiative, according to the government statement.

Parts of land belonging to the state-owned companies can be converted into land banks and used to promote Smart City initiatives. “If the land is in dense urban areas, it could be used to develop eco-systems to nurture start-ups, and if located in smaller towns and cities, it could be used to develop sites for industrial clusters.”

Industries with a high demand for power should be allowed to absorb the excess generation capacity through open access (OA). Consumers with electricity load above one MW are permitted by the OA policy (under the Electricity Act 2003) to procure power directly from electricity markets. Presently, the efficiency of electrical energy usage has fallen with an increase in power generation capacity not being able to be capitalised by distribution companies due their financial inability to purchase electricity.

The Make in India Initiative aims to transform India into a global manufacturing hub and increase the share of manufacturing in India’s GDP from a stagnant 15-16 per cent since 1980 to 25 per cent by 2022 and create an additional 100 million jobs.

On the issue of countervailing duty exemptions, the Economic Survey last year had also pointed out that the duties were not imposed on several items of imports. The survey had said the effective rate of excise on domestically-produced non-oil goods was about 9 per cent. Though the effective collection rate of CVDs should theoretically be the same, in real terms it was only around 6 per cent. This difference represents the fiscal cost to the government to the tune of around Rs.40,000 crore, the survey had said.

Eliminating policies — currently providing negative protection for Indian manufacturing and favouring foreign manufacturing — could be achieved by quickly implementing the Goods and Services Tax (GST), according to the survey. However, if delays are envisaged in rolling out the GST, a similar result could be achieved by eliminating the duty exemptions.

Another factor that could have an adverse effecton the Make in India Initiative will be India’s decision to join the US-led mega regional free trade pact called the Trans-Pacific Partnership (TPP) at a future date. Membership of the TPP would prevent the Indian government from using state-owned enterprises and government procurement as vehicles for achieving social and economic objectives, including employment generation, thereby have to compromise on the Make in India Initiative policy.

Poverty and Destitution:-

There is a difference between poverty and destitution, or what I call pauperism. In poverty, it is difficult to make ends meet. You somehow cope, do your level best to add to your income. In destitution, you are simply unable to cope.

Excerpts from the interview of Jan Breman :-

Where is the need for terms such as ‘pauper’ and ‘pauperism’ as analytical categories, when we already have ‘poverty’?

There is a difference between poverty and destitution, or what I call pauperism. In poverty, it is difficult to make ends meet. You somehow cope, do your level best to add to your income. So you also have your wife and children working along. In destitution, you are simply unable to cope. You are so utterly poor that it is difficult to even survive. And if you survive, you need outside support. Unfortunately, the poverty debate in India has more or less been appropriated by economists. So we look at income or consumption or employment levels, and not at the social or political dimension of poverty. A category such as ‘pauperism’ is needed to capture these non-economic aspects as well.

You argue in your book that India’s poverty line is a destitution line. Are you saying that those below poverty line in India are not poor but destitute?

Not all but a good number are. According to the National Commission for Enterprises in the Unorganised Sector (NCEUS), the poverty line fixed by the Planning Commission is a joke: 76 per cent of the Indian population is living in poverty. If you have such a vast mass of poor, you have to differentiate between levels of poverty. Certainly a big number is close to the poverty line. But in my estimate, about 25 per cent of India’s poor are destitute, or paupers.

So from an economist’s perspective, do we need another line, below the poverty line, to identify the paupers?

The poverty line is a sort of magical construction. If you cross it, you are suddenly out of poverty. So the policy focus is always on those who are able to go past that threshold. As a result, there is absolutely no interest in those at the bottom, those way beneath the poverty line.

So who is a pauper, in sociological terms?

In the first place, the paupers are the non-labouring poor, those who have no earning capacity. They never had or have lost their labour power and therefore can’t make a living. These include the elderly, the disabled, the chronically ill, but also widows with small children, divorcees without any support from others. Basically, in order to survive in poverty, you need a household. You cannot manage on your own because the flow of income varies with the seasons. You need to pull the household together to bring in the income — this is why you have child labour in India, isn’t it? But paupers also include the labouring poor, especially those whose income and employment are erratic or seasonal.

But Indian economists don’t believe in terms like ‘pauper’.

That’s true. It was only Gandhi who wrote about paupers in an article published in Young India in 1928, when he was in south Gujarat. He argued that we cannot fight colonialism if we do not fight colonialism in our own society. He pointed out that paupers had been around in India for a long time. I use the term pauper to evoke the conditions in Victorian England, where the casual poor were driven out of the countryside to work in the mills during the industrial revolution. In the same way, the casual poor are being driven out of the countryside in 21st century India.

England amended its Poor Laws in 1834 to pauperise the rural labour and drive them to the cities. What is India doing to create an exodus from the countryside?

Your agrarian crisis. Agriculture is not able to provide livelihood for the land-poor and the landless classes, who have lived in the villages from time immemorial. So they are forced to leave the villages. But the city doesn’t want them either.

How can you say the city doesn’t want them? India is building a hundred smart cities. Who will live in them if not migrants?

Talk to policymakers, talk to municipal officials of any city. They will tell you they don’t want the poor around, that they are a burden on our modern, beautified, smart cities. The policy of the municipality in every Indian city has been to periodically evict the poor.They try desperately to find employment but are unable to establish themselves even in the slums. They hang around in the labour chowks, they become pavement dwellers because there is no shelter for them in the night. When weeks pass by without any work at all, they go back to the villages. I use the term ‘circular migration’ to describe this movement — from villages to cities and back to villages, in an endless cycle. This is widespread in Bihar, Andhra Pradesh, Rajasthan, Uttar Pradesh, Tamil Nadu. But you find it in every State.

Can the poor in India hope for inclusive citizenship?

Citizenship is about rights and obligations. It is about being able to make claims on the state, and at the moment this is a privilege afforded by a minority of the Indian population. Also, inclusive citizenship not only means offering employment (inclusion in economic terms) but also creating space for them in terms of housing, health, schooling, skilling, and inclusion in social terms — which means focussing on equality. But we don’t see pro-equality policies, only pro-inequality policies. The mindset of the Indian elite is: the poor are different from me and I don’t want them around.

Sammakka-Sarakka Jatara:-Tribal Festival in Telengana

Unlike Bathukamma and Bonalu festivals that are celebrated across the state, the tribal festival of Sammakka-Sarakka Jatara sees the convergence of lakhs of people at one particular place — Medaram village in Warangal district. Every two years, the sleepy village comes alive for three days for the Medaram Jatara to commemorate the battle of a mother and daughter, Sammakka and Saralamma against an unjust law imposed by the reigning king.